How to Qualify as a Foreign Business in Rhode Island

Learn the rules for qualifying your LLC to do business in Rhode Island.

By , Contributing Author

If you own a business that was created in a state other than Rhode Island, you will need to qualify or register that business in Rhode Island if you want to do business there. Here is an overview of the rules on how to qualify your foreign (non-Rhode Island) limited liability company (LLC) to do business in Rhode Island.

What is a Foreign LLC?

For Rhode Island purposes, if your LLC is formed in another state, then it is known as a foreign LLC in Rhode Island. In other words, foreign doesn't mean from another country. Instead, it means your business was organized under the laws of another state. A domestic LLC, on the other hand, is one that is formed in the state where it is doing business. This is common usage throughout the United States. For example, an LLC formed in Arizona is a foreign LLC in Colorado.

Transacting Business in Rhode Island

According to Rhode Island's LLC Act, you are required to register your foreign company with the state of Rhode Island if you are "transacting business" in Rhode Island. What does this mean? Well, like most states, Rhode Island's LLC Act does not specifically define the phrase "transacting business" in relation to foreign registrations.

However, state laws governing when foreign companies must collect state sales tax in their state provide some guidance on the issue. Under these laws, a business must have a physical presence in—or nexus with—the state in order to be required to collect state sales tax on sales to that state's residents. Generally speaking, physical presence and nexus are synonymous, and mean having:

  • a warehouse in the state
  • a store in the state
  • an office in the state, or
  • a sales representative in the state.

Certain exceptions may apply and the rules can get more complicated with things like Internet sales. Nevertheless, in general, if you have an office, a store, a warehouse, or employees in another state, you will need to qualify your LLC as a foreign company in that state. For more details, including some possible distinctions between physical presence and nexus, check Nolo's articles on Internet Sales Tax: A 50-State Guide to State Laws.

Certain Activities Are Exempt

Like most states, Rhode Island's LLC Act specifies certain activities that do not constitute transacting business in the state. The items listed include:

  • defending or settling a lawsuit
  • dealing with internal business affairs such as holding member or manager meetings
  • having a bank account in the state
  • having an office, agency, or persons in the state for handling your company's own securities
  • selling through independent contractors
  • soliciting or obtaining orders where the orders require acceptance outside the state before they become contracts
  • creating as borrower or lender or acquiring evidences of debt, mortgages, security interests, or liens on property
  • securing or collecting debts
  • transacting business in interstate commerce
  • conducting an isolated transaction that is completed within thirty days and is not one in the course of similar, repeated transactions
  • acting as a general partner of a domestic or foreign limited partnership; and
  • acting as a member of a domestic or foreign LLC.

The LLC Act also indicates that this list is not exclusive; other activities also may be exempt. For the full, legal description of each of the listed items, check Section 7-16-54 of the Rhode Island General Laws. If your LLC's only activity in Rhode Island is one or more of the listed items, you should not need to register with the state.

Application for Registration

To register your business in Rhode Island, you must file an Application for Registration with the Rhode Island Secretary of State (SOS). You can download a copy of the application form from the SOS website.

To complete the form, you must provide more or less the same information that you need to create an LLC in your home state. More specifically, for a Rhode Island application for registration, you need to provide:

  • the name of your LLC as registered in the state where it was organized
  • if different, the name under which your LLC will do business in Rhode Island (a different name is necessary if your LLC's original name is already being used by a Rhode Island registered business)
  • the state where your LLC was organized
  • the date when your LLC was organized
  • the street address of your LLC's resident agent in Rhode Island
  • the name of your LLC's resident agent in Rhode Island
  • a statement that the Rhode Island Secretary of State will act as your LLC's resident agent if it does not have one or the agent cannot be found
  • if the state where your LLC is organized requires the LLC to have an office in that state, the address of the required office
  • the mailing address for your LLC
  • a statement that your LLC is member-managed or manager-managed
  • if your LLC manager-managed, the names and addresses of all managers
  • a copy of a certificate of good standing from the secretary of state or other authorized officer of the state where your LLC is organized
  • if other than the filing date, an effective date for the application, and
  • an authorized signature.

If your LLC will provide certain types of professional services you may need to provide additional documents. Check the application instructions for details. The filing fee is $150.

What Happens if You Don't Register?

If your LLC transacts business in Rhode Island without authority, it cannot bring a lawsuit in any of the state's courts. However, not being registered does not invalidate your LLC's contracts or prevent it from defending a lawsuit in Rhode Island. Also, a member of the LLC is not liable for the LLC's debts and obligations solely because the company transacted business in Rhode Island without authority.

Registering a Foreign Corporation in Rhode Island

If your business is organized as a corporation rather than an LLC, the rules and requirements for foreign qualification in Rhode Island are similar. You will, however, have to use a different Application for Registration(Form 450). See the Rhode Island Secretary of State website for forms, information, and filing instructions for registering a foreign corporation in Rhode Island.

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